Two departments: improving the cost transmission mechanism of electricity auxiliary services, fully mobilizing the enthusiasm of adjustable resources to actively participate in system regulation.

On April 29th, the National Development and Reform Commission and the National Energy Administration jointly released the "Basic Rules for the Electricity Ancillary Services Market". It mentions that based on ensuring the safe and stable operation of the power system, promoting the construction of a new type of power system, scientifically determining the demand for electricity ancillary services market, reasonably setting the types of electricity ancillary services market transactions, and strengthening the coordination with the electricity energy market. According to the principle of "who provides, who benefits, who benefits, who bears", optimizing the price formation mechanism of various types of electricity ancillary services markets, improving the cost transmission mechanism of electricity ancillary services, fully mobilizing the active participation of adjustable resources in system regulation, constructing a unified and standardized electricity ancillary services market system, and serving the construction of new types of power systems.Market operation agencies in China refer to organizations responsible for the construction and operation of electricity ancillary services markets, including power dispatch agencies and power trading agencies.Article 2: Rights and Responsibilities of Market Participants Article 10: Operating entities participate in transactions in the electricity ancillary services market, abide by the results of the transactions, receive income from electricity ancillary services, and bear the cost-sharing of electricity ancillary services. Article 11: Grid companies provide services to operating entities such as power transmission and distribution, grid access, metering data collection, and electricity bill settlement. Article 12: The power dispatching agency, as the purchaser of electricity ancillary services, is responsible for proposing electricity ancillary service requirements that meet the requirements for safe system operation, and for collectively purchasing various types of electricity ancillary services. They are responsible for organizing ancillary service transactions, market clearance, service invocation, cost calculation, proposing safety constraints, conducting safety audits, and monitoring the operation of the ancillary services market. They are also responsible for constructing, operating, maintaining, and managing technical support systems related to the ancillary services market. Article 13: The electricity trading institution is responsible for services related to market registration, changes, and exits for operating entities, and for disclosing information about the electricity ancillary services market, providing settlement basis, and cooperating with the power dispatching agency to carry out related transaction organization work. Section 3: Market Member Registration Article 14: Operating entities should, in principle, have legal personality (or authorization from a legal entity), legally and regularly obtain a power business license (excluding exemptions), and have independent financial accounting and good credit qualifications. Article 15: Operating entities participating in the ancillary services market should have the technical capability to receive and execute market clearance results or dispatch instructions. Article 16: All types of operating entities with the capability to provide electricity ancillary services are equally eligible to participate in the electricity ancillary services market. Operating entities that receive capacity charges should, in principle, participate in the declaration of the electricity ancillary services market. Article 17: All types of operating entities must complete market registration procedures at the electricity trading institution before participating in the electricity ancillary services market transactions. When there are changes to market registration information, an application for changes should be submitted to the electricity trading institution. Article 18: Operating entities that are unable to continue providing electricity ancillary services due to retirement, bankruptcy, policy adjustments, system constraints, etc., should settle relevant fees, transfer or terminate unfulfilled contracts, and only exit the electricity ancillary services market after the electricity trading institution completes the deregistration procedures. Chapter 3: Market Establishment Article 19: The power dispatching agency proposes the need to establish the electricity ancillary services market in accordance with the requirements for safe and stable system operation, the situation of the electricity energy market development, etc. They outline the types of ancillary services market transactions and formulate relevant technical standards according to relevant national regulations, industry standards, and actual system needs. Article 20: The power dispatching agency drafts a demand analysis report for the ancillary services market and submits it to the National Energy Administration and provincial price and energy regulatory departments. The analysis report should include the characteristics of the local power system operation, the development of the electricity energy market, the necessity of establishing the ancillary services market, analysis of influencing factors, relevant work suggestions, etc. Article 21: The National Energy Administration and provincial price and energy regulatory departments, together with relevant organizations including grid companies, operating entities, and market operators, analyze and justify the reasonableness of the demand. Article 22: The National Energy Administration and provincial price regulatory departments, together with the relevant organizations, formulate implementation plans for the types of ancillary services market transactions, trading mechanisms, price mechanisms, price limit standards, cost transmission methods, etc. They solicit opinions from local energy and power operation departments, submit them to the National Energy Administration for approval, and implement them with the consent of the National Development and Reform Commission. Article 23: The National Energy Administration, together with provincial price and energy regulatory departments, in accordance with the implementation plan, organize the market operation institution to draft detailed rules for the implementation of the electricity ancillary services market. They reasonably determine market-related parameters based on the needs for safe system operation, the cost of electricity ancillary services, historical data surveys, simulated test results, the market incentive effect, and the impact on electricity prices, etc. After extensive consultation, the rules are issued for implementation following deliberation by the market management committee. Article 24: The technical support system of the electricity ancillary services market should include functions such as trading declaration, market clearance, trading settlement, trading management, information release, safety audit, etc., which comply with relevant technical specifications and market rules. Article 25: When new varieties are established in the electricity ancillary services market, the market operation institution should conduct simulated trial operation, settlement trial operation, and formal operation in sequence. (1) The content of simulated trial operation mainly includes: organizing operating entities to participate in the declaration of electricity ancillary services market, verifying the functionality of the technical support system, timely production scheduling according to market clearance results; proposing modification suggestions for market rules based on the results of simulated trial operation, improving the technical support system, recording key processes for future reference; and preparing a simulated trial operation analysis report. (2) The content of settlement trial operation mainly includes: production scheduling settlement according to market clearance results; proposing modification suggestions for market rules and related parameters based on settlement trial operation results, improving the technical support system, recording key processes for future reference; preparing a settlement trial operation analysis report to evaluate the role and impact of the ancillary services market. (3) The content of formal operation mainly includes: operating the market continuously in accordance with market rules, ensuring the normal operation of the technical support system, conducting production scheduling and settlement based on market clearance results, and disclosing information, intervening in the market, handling disputes, etc., in accordance with laws and regulations. (4) The time interval between the first settlement trial operation and the start of formal operation shall not be less than 1 year. Article 26: The power dispatching agency takes the lead in studying and proposing modifications to key operating parameters of the market. After deliberation and approval by the market management committee, they are executed with the consent of the National Energy Administration and provincial price and energy regulatory departments. Chapter 4: Market Varieties Article 27: The main market varieties in the electricity ancillary services market include peak regulation services, frequency regulation services, reserve services, and ramping services. Article 28: Peak regulation services refer to services provided by operating entities to adjust the power generation according to peak and valley changes in system load and renewable energy output, based on dispatch instructions or clearance results. Article 29: Frequency regulation services refer to services provided by operating entities to reduce system frequency deviation (or tie-line control deviation) through systems such as speed control systems, automatic power control, etc.Frequency service mainly provides secondary frequency regulation services. Secondary frequency regulation services refer to the active power adjustment services provided by the operator through automatic power control technology, including automatic generation control (AGC), automatic power control (APC), etc. Article 30 Backup service refers to the service provided by the operator to adjust the real power output within the specified time in order to meet the needs of system safety operation and reserve regulating capacity. Article 31 Climbing service refers to the service provided by the operator with a strong load regulation rate to adjust the output according to dispatch instructions in order to maintain system power balance in response to short-term large fluctuations in system net load caused by uncertainties such as renewable energy generation fluctuations. Chapter V Trading Organization Article 32 In accordance with the needs of the power system and economic dispatch requirements, the power dispatching agency comprehensively considers the power structure, power transmission and reception, net load curve fluctuations, and maximum total dispatch load, and provides information on various types of ancillary services market demand. The operators participating in the ancillary services market must submit the corresponding transaction declarations as required within the specified time. Article 33 The power dispatching agency determines the market clearance results and calls for ancillary services based on the declaration results and market rules. Article 34 The power dispatching agency calls for the winning operators according to the market clearance results and performs service billing. Article 35 In case of insufficient supply, suspension, or interruption of the power ancillary services market transactions, the power dispatching agency will call for emergency resources to ensure system operation safety, and disclose relevant information in a timely manner afterwards. Chapter VI Cost Transmission Section 1 Cost Generation Mechanism Article 36 Efforts are made to promote the formation of ancillary service prices in an orderly manner through the market. For ancillary services varieties with market conditions, prices are formed through market transactions; for varieties without market conditions, price mechanisms are separately formulated. Article 37 The cost of peak shaving service is calculated based on the clearance price, contracted peak shaving capacity, and actual peak shaving output, or based on the clearance price and start-stop frequency. The cost of frequency regulation service is calculated based on factors such as frequency regulation mileage, performance coefficient, and clearance price. The cost of backup service is calculated based on the contracted capacity, contracted time, clearance price, etc. The cost of climbing service is calculated based on the contracted capacity, contracted time, clearance price, etc. The cost of electricity generated during the provision of ancillary services by operators is settled in accordance with the electricity market rules. Article 38 Operators who fail to provide effective ancillary services as per the transaction results due to their own reasons shall bear corresponding default liabilities in accordance with market rules. Section 2 Cost Transmission Mechanism Article 39 In accordance with the principle of "who benefits, who bears the cost" and in combination with the construction of the electricity spot market, a cost transmission mechanism for ancillary services should be established. Article 40 In areas where the electricity spot market is not continuously operating, ancillary service costs are not generally passed on to the user side. In areas where the electricity spot market is continuously operational, the costs of frequency regulation, backup, and other ancillary services are generally shared between user electricity consumption and off-market grid electricity consumption, with the sharing ratio determined by the provincial price regulatory department. Ancillary service costs that need to be borne by operators should be approved through proper procedures. Article 41 Single entities such as independent energy storage and virtual power plants, in the settlement period, participate in the sharing or distribution of generation-side (user-side) ancillary service costs based on on-grid (off-grid) electricity consumption. Article 42 To promote cross-provincial and cross-regional transactions, both parties should fairly and reasonably bear and receive ancillary service costs based on the provision and benefit of ancillary services at the transmission and receiving ends. Chapter VII Market Coordination Article 43 Efforts should be made to coordinate the overall development of the electricity market, power ancillary services market, etc., in terms of market registration, trading sequence, market clearance, cost transmission, etc., to fully leverage the role of the power ancillary services market in ensuring system safety and stability, enhancing system flexibility and regulation. Article 44 Active ancillary services markets such as frequency regulation, backup, climbing, etc., may clear independently from the spot market, and efforts should be made to promote joint clearing with the spot market when conditions permit. Article 45 In accordance with the requirements of grid resource allocation and system operation constraints, as well as the construction of provincial/regional electricity spot markets, provincial/regional frequency regulation, backup, and other service markets should be established based on local conditions. Regional peak shaving and backup transactions involving electricity exchange should be promptly converted into electricity transactions. Chapter VIII Measurement and Settlement Article 46 Measurement and data collection periods should meet the minimum trading period and accuracy requirements for ancillary services. In case of missing measurement data, it may be supplemented according to fitting rules. Article 47 Ancillary service settlements should follow the principle of "daily clearing and monthly settlement," with daily results calculated and a monthly settlement basis generated for electricity billing. Article 48 Ancillary service settlements must adhere to the principle of balance between income and expenditure. The costs of various ancillary services should be listed separately in the electricity billing statement and not be bundled with other expenses. Article 49 The power dispatching agency is responsible for maintaining records of ancillary service calls and executions by operators, conducting related cost calculations for ancillary service compensation and allocation, and sending the calculation results to the power trading agency. The power trading agency, based on the cost calculation results, will issue a settlement basis involving other trading costs, make it public to operators, and send it to the grid companies. The grid companies are responsible for ancillary service measurement and conducting cost settlement. Article 50 Operators are required to verify the settlement basis after it is published. Any objections should be raised to the market operation organization. Article 51 In case of errors in measurement, electricity prices, etc., that require rectification or refunds, the market operation organization should complete the ancillary service cost rectification and refund within 1 month. Chapter IX Information Disclosure Article 52 Information regarding the power ancillary services market is classified into three categories: public information, open information, and specific information in accordance with the basic rules of electricity market information disclosure. Market participants should follow safety, truthfulness, accuracy, completeness, timeliness, and ease of use principles when disclosing information. Grid companies and market operation organizations should disclose information including calculation methods for ancillary service demands, calling principles, total demand, transaction declarations, clearance information, cost settlement, etc., in accordance with relevant regulations. Article 53 If operators have objections to the disclosed information, they should apply for a review within 5 working days. The power trading agency should promptly conduct a review and provide a response upon receiving the review application. If operators still have objections after the response, they can request arbitration from the market regulatory authority.Within 5 working days, we should verify with the power dispatch agency and provide a response.Article 54: Any market participant shall not illegally obtain or disclose information that has not been authorized to be disclosed. Employees of market participants shall not publicly make statements that may affect market transaction results without permission. Chapter X Risk Prevention and Control Article 55: Establish and improve the risk prevention and control mechanism for auxiliary service markets to prevent market risks, ensure the safety and smooth operation of the power system and the market, and uphold the public interests of society and the legitimate rights and interests of business entities. Article 56: Market operating agencies are responsible for carrying out market monitoring and risk prevention and control duties. Market participants shall collectively abide by and implement the risk prevention and control duties for auxiliary service markets in accordance with regulations. Article 57: The main types of risks in auxiliary service markets include: (1) Supply and demand risks for auxiliary services, referring to the risk of tight supply of auxiliary services and difficulty in meeting the demand for auxiliary services. (2) Market power risks for auxiliary service markets, referring to the risk of business entities with market power manipulating the prices of auxiliary services. (3) Abnormal price risks in auxiliary service markets, referring to the risk of prices in auxiliary service markets being consistently higher or lower during certain periods or in specific regions, with fluctuations or duration significantly exceeding the normal range of change. (4) Technical support system risks in auxiliary service markets, referring to the risk of various technical support systems that support the auxiliary service market experiencing abnormalities or becoming unavailable, affecting the normal operation of the market. (5) Network security risks, referring to the risk of the confidentiality, integrity, and availability of attacked systems and their data being compromised due to attacks, interference, and destruction such as hacking and malicious code. Article 58: Market operating agencies shall issue warnings for market risks in accordance with relevant procedures and report to the dispatched agencies of the National Energy Administration and provincial price and energy authorities. Article 59: Market operating agencies are responsible for preparing risk disposal plans, including risk levels, disposal measures, responsibilities of all parties, etc., and regularly revising them. Risk disposal plans shall be executed after approval by the dispatched agencies of the National Energy Administration and provincial price and energy authorities. Article 60: When market risks occur, all parties shall implement relevant plans made in advance. Power dispatching agencies shall handle the market in emergency situations according to the principle of safety first, detailed records of the relevant circumstances during emergency handling shall be made, and reports shall be submitted to the dispatched agencies of the National Energy Administration and provincial price and energy authorities. Chapter XI Supervision and Management Article 61: The National Energy Administration shall perform the supervision responsibilities for the national power auxiliary service market in accordance with the Electricity Regulation and Power Market Regulation and relevant provisions of the State Council. Dispatched agencies of the National Energy Administration are responsible for market supervision of the power auxiliary service within their jurisdictions. Article 62: The supervision objects of the power auxiliary service market include various business entities participating in the auxiliary service market, power grid enterprises, market operating agencies, etc. Article 63: Local power grid enterprises shall regularly submit information on the prices, fees, profits, and allocation of various business entities involved in auxiliary service transactions to the dispatched agencies of the National Energy Administration and provincial price and energy authorities. Article 64: Market operating agencies shall monitor and analyze the construction, operation, price clearing, fee transmission, and allocation of the auxiliary service market. Article 65: When disputes arise in auxiliary service transactions, business entities can file complaints with market operating agencies. Market operating agencies shall verify and respond within the specified period. If the dispute persists, it can be resolved through mediation by the market management committee or by submitting to the dispatched agencies of the National Energy Administration for coordination in accordance with the law. If the coordination fails, the dispute can be resolved through arbitration, judicial means, etc. Chapter XII Miscellaneous Article 66: These rules shall be interpreted by the National Development and Reform Commission and the National Energy Administration. Article 67: These rules shall come into effect from the date of publication and shall be valid for five years. This article is selected from the "National Development and Reform Commission Official Website" and edited by GMTEight: Xu Wenqiang.